SALLY HAMILTON: The cruel cost of the student fees system and its exploitative rates of interest

My ‘Room 101’ list would include earphone-wearing pedestrians with no spatial awareness and people who ‘reach out’ to me with press releases. But high up there is the ‘back to school’ advertising bombarding families even before the summer term’s prize-giving day.

Give us a break and let us enjoy our holidays. But worse than the adverts is the nasty bill. Nationwide Building Society calculates the collective sum for back to school kit is nearly £1.5billion – an average of £174 per child.

Fortunately, parents can trim costs – perhaps by purchasing a supermarket blazer and sewing on the school’s badge and trading second-hand uniforms using local social networking websites such as Facebook. If specialist kit is necessary, but funds tight, a zero per cent purchase credit card might ease the financial pain.

Crippling costs: Tuition fees alone now cost as much as £9,250 a year and most students can look forward to a debt burden of £50,000 or more

A more colossal financial challenge awaits older offspring. Those who achieved the relevant A-level results last week to get into university would laugh in the face of the uniform bill.

Tuition fees alone now cost as much as £9,250 a year and most students can look forward to a debt burden of £50,000 or more. What is most sickening is this total includes crippling interest, which starts to mount even while students have their heads buried in their text books.

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HOW THIS IS MONEY CAN HELP

Nick Timothy, Theresa May’s former chief of staff last week called the current fees system a ‘pointless Ponzi scheme’ particularly for those who end up in careers that do not require a degree. But even those who go on to graduate-level jobs should not be so severely punished (and note well, they are also voters).

Shame on the Government for these exploitative rates of interest – set at March’s RPI of 3.1 per cent plus up to 3 percentage points for this year’s intake.

A colossal financial challenge awaits students who achieved results to get into university

Critics have been calling for a change in the way the interest is calculated, scrapping the discredited RPI measure that overestimates inflation, and replacing it with the more realistic CPI – a step that would cut student loan interest by 1 percentage point.

Danny Cox of financial adviser Hargreaves Lansdown says this could save a typical student about £18,000 in interest.

Paul Johnson of the Institute for Fiscal Studies tells me that no other country uses a measure like RPI – so why does the UK Government? Mainly because it rakes in more money this way.

Better to link the loan interest to the cost of borrowing – that is, to real world interest rates (0.25 per cent) – and not to inflation. More tolerable too if applied only after graduation.

Lasting Powers of Attorney

Imagine as you get older handing over all your financial arrangements (legally) to a trusted friend or relative. A huge relief for someone too frail to make even everyday money decisions. That is, until this ‘trusted’ person drains your bank account or pockets the proceeds from selling your home.

Lasting Powers of Attorney came in for some abuse last week when retired judge Denzil Lush criticised the lack of safeguards on these arrangements that transfer the decision-making to another person if you lose capacity.

Lush has seen many cases of abuse of these powers and prefers the alternative of someone being appointed by the Court of Protection (his former employer) – a lengthy and expensive process.

The nation has been setting up LPA arrangements by the bucketload with 2.5million in place – 650,000 were registered last year alone.

Helen Morrissey of insurer Royal London believes improvements could be made. But she says it is already possible to make attorneys more accountable, such as by appointing a second attorney to spot and challenge suspicious behaviour.

Legal firm Veal Wasbrough Vizards says concerned ‘donors’ – those who take out an LPA – can demand attorneys produce accounts, as well as request that independent financial advice is always sought. But such measures must be written into the paperwork. It can make sense to enlist a solicitor’s help (but expect to pay several hundred pounds).

GLP Solicitors suggests the authorities should demand the documents are countersigned by a doctor, who could confirm a donor was not lacking mental capacity or under undue influence. Insurance could also be an option, to cover any loss from theft.

Whatever the weaknesses, these arrangements are vital. I am the attorney for my mother. Without an LPA, managing her affairs would be miserable, both for her and for me.

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